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Tag: Medigap

Healthcare Costs in Retirement

In a 2020 survey, 36% of all workers reported they were either “not too” or “not at all” confident that they would have enough money to pay for their medical expenses in retirement. Regardless of your confidence, however, being aware of potential health care costs during retirement may allow you to understand what you can pay for and what you can’t.1

Health-Care Breakdown

Faucet

A retired household faces three types of health care expenses.

  1. The premiums for Medicare Part B (which covers physician and outpatient services) and Part D (which covers drug-related expenses). Typically, Part B and Part D are taken out of a person’s Social Security check before it is mailed, so the premium cost is often overlooked by retirement-minded individuals.
  2. Copayments related to Medicare-covered services that are not paid by Medicare Supplement Insurance plans (also known as “Medigap”) or other health insurance.
  3. Costs associated with dental care, eyeglasses, and hearing aids – which are typically not covered by Medicare or other insurance programs.

It All Adds Up

According to a HealthView Services study a 65-year-old healthy couple (male living to age 87; female, age 89), can expect their lifetime health care expenses to add up to around $606,337.2

Should you expect to pay this amount? Possibly. Seeing the results of one study may help you make some critical decisions when creating a strategy for retirement. Without a solid approach, health care expenses may add up quickly and alter your retirement spending.

Prepared for the Future?

Workers were asked how much they have saved and invested for retirement – excluding their residence and defined benefit plans.

Chart

Source Employee Benefit Research Institute, 2020

To learn more about CapSouth Wealth Management contact our office at 900.929.1001 or visit our website at www.capsouthwm.com

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1. Employee Benefit Research Institute, 2020
2. HealthView Services, 2019

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with CapSouth Wealth Management. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Copyright 2020 FMG Suite.

What is Medigap Insurance and How Do I Get It?

Establishing a national health insurance plan for senior Americans has followed a sometimes-wayward path through U.S. history.

President Teddy Roosevelt first began discussing the idea of implementing a system of health insurance in the United States more than a century ago. President Harry Truman called for developing a health insurance fund in 1945.[i]

President John F. Kennedy pushed unsuccessfully to create a national health insurance program for senior Americans.

In 1965, President Lyndon B. Johnson signed legislation that established Medicare. More than 58 million people now receive health insurance through Medicare.

Medicare Covers About 80%

Original Medicare—which includes parts A, B, and D—does not cover all medical expenses.[ii] Typically, those on Medicare still must pay 20% of the cost of their doctor’s visits and for other medical procedures.

Medicare.gov provides more in-depth explanations of payment schedules and treatment coverage.

Most people who have Medicare Part A (hospital insurance) don’t pay monthly premiums.[iii]

If you didn’t pay Medicare taxes for at least 30 quarters (7½ years) of work, you’ll have to pay $422 for Part A. If you paid Medicare taxes for 30-39 quarters, your standard Part A premium will be $232 a month.[iv]

A Quarter of Medicare Recipients Have Supplemental Insurance

Nearly 12 million people on Medicare—about one in four—have supplemental Medigap coverage.[v]

Medigap often covers all or most of the difference in health-care costs—that 20% not covered by Medicare.[vi] Policy and coverage choices include plans A, B, C, D, F, G, K, L, M, and N. Private companies provide the government standardized coverage.

Medigap covers copayments, coinsurance, and deductibles.[vii] Some policies provide coverage of services that Medicare doesn’t cover.

Medicare pays its portion of covered approved health-care services first before Medigap insurance pays its share.

Here are eight facts about how Medicare and Medigap work:

  1. You have to have Medicare Parts A and B.
  2. Medigap coverage is not Medicare Advantage, which is offered by private companies contracting with Medicare.[viii] Medicare Advantage includes:
  • Health Maintenance Organizations
  • Preferred Provider Organizations
  • Private Fee-for-Service Plans
  • Special Needs Plans
  • Medicare Medical Savings Account Plans

3.  Medigap only covers one person per policy. You and your spouse have to get separate policies.

4. Any state-licensed insurance company may offer Medigap coverage.

5. Renewal of standardized Medigap coverage is guaranteed. Your provider cannot cancel your policy if you’re paying your premiums.

6. Some Medigap policies sold before January 1, 2007 provided prescription coverage. Those sold after that date are legally prohibited from providing drug coverage. Medicare’s Part D    plans cover prescription drugs.

7. You are not permitted to buy a Medigap policy if you already have a Medicare Advantage Plan, unless you’re dropping the plan to go back to Medicare.

8. If you’d like more information about your financial options or to learn more about your financial needs, we’re happy to help. Contact us at 800.929.1001.

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third-party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.medicareresources.org/basic-medicare-information/brief-history-of-medicare/

[ii] https://www.investopedia.com/terms/m/medigap-insurance.asp

[iii] https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance

[iv] https://www.medicare.gov/your-medicare-costs/part-a-costs

[v] https://www.gomedigap.com/blog/medicare-supplement-trends/

[vi] https://www.investopedia.com/terms/m/medigap-insurance.asp

[vii] https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap

[viii] https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/medicare-advantage-plans

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